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General Obligation Law Sec. 15-108 has long been a trap and a well known trap at that.  Settle with one defendant, and the rest of them get to try their case against an empty seat, and get the greater of the settlement amount or the equitable share of the settling defendant.

But, as of Today new legislation changes all of that!

CHAPTER TEXT:
LAWS OF NEW YORK, 2007

CHAPTER 70

AN ACT to amend the general obligations law, in relation to the impact
of litigation settlements upon the remaining parties to the action

Became a law June 4, 2007, with the approval of the Governor.
Passed by a majority vote, three-fifths being present.

The People of the State of New York, represented in Senate and Assem-
bly, do enact as follows:

Section 1. Section 15-108 of the general obligations law is amended by
adding a new subdivision (d) to read as follows:
(d) Releases and covenants within the scope of this section. A release
or a covenant not to sue between a plaintiff or claimant and a person
who is liable or claimed to be liable in tort shall be deemed a release
or covenant for the purposes of this section only if:
(1) the plaintiff or claimant receives, as part of the agreement,
monetary consideration greater than one dollar;
(2) the release or covenant completely or substantially terminates the
dispute between the plaintiff or claimant and the person who was claimed
to be liable; and
(3) such release or covenant is provided prior to entry of judgment.
§ 2. This act shall take effect on the thirtieth day after it shall
have become a law and shall apply to all releases or covenants not to
sue effective on or after such effective date.

Here is the sponsor’s memo:

"SPONSORS MEMO:NEW YORK STATE SENATEINTRODUCER’S MEMORANDUM IN SUPPORTsubmitted in accordance with Senate Rule VI. Sec 1
BILL NUMBER: S3739

SPONSOR: DEFRANCISCO

TITLE OF BILL: An act to amend the general obligations law, in
relation to the impact of litigation settlements upon the remaining
parties to the action

This measure, a predecessor of which the Legislature passed in 2006, is
one in a series of measures being introduced at the request of the Chief
Administrative Judge on the recommendation of his Advisory Committee on
Civil Practice. The 2006 measure contained a technical defect that
required its disapproval (see Veto #259-2006). This current draft
corrects that technical defect.

This measure would amend section 15-108 of the General Obligations Law
("G.O.L.") to exclude certain releases from its scope, most importantly
including those instances in which the plaintiff voluntarily discontin-
ues his or her suit against a particular defendant without receiving any
monetary consideration for that release. This would encourage plaintiffs
to voluntarily release those defendants who appear not to bear any
liability, which would in turn reduce the litigation costs of those
ostensibly blameless defendants. The amendment would also make many
summary judgment motions unnecessary, and would thus reduce the burden
on the court system.

Section 15-108 of the G.O.L prescribes the consequences which ensue when
a tort plaintiff releases from liability one or more, but fewer than
all, of the alleged tortfeasors. In broad strokes, current G.O.L.
§15-108 applies when a plaintiff settles with a "tortfeasor" (usually,
but not invariably, a defendant). In such event, current subdivisions
(b) and (c) provide that the settling tortfeasor can neither seek
contribution from the other tortfeasors nor be held liable for contrib-
utions to the others, the underlying theory being that the settlor has
brought his or her peace. The settling tortfeasor can, however, seek
indemnification from the other tortfeasors, and may also be sued there-
for.

A significant issue arises when, during the course of discovery, it
appears that a defendant whom plaintiff initially thought might bear
some liability was, in fact, blameless. Because the plaintiff and
plaintiff’s counsel generally do not want superfluous parties that must
be served with every single document and consulted about court dates and
deadlines, the plaintiff would generally like to give such a defendant
his or her "walking papers." Of course, that is also what the ostensibly
blameless defendant would like – – to be released immediately and with-
out incurring any further attorney’s fees. It is also what the court
system would prefer to happen.

There is, however, a problem. If the plaintiff were to release the
apparently blameless defendant, and if one of the remaining defendants
were to prove at trial that the released defendant was indeed partially
at fault for the plaintiff’s damages, then the defendants still left in
the case would be entitled to a reduction of their liability. See

KILLEEN V. REINHARDT, 71 A.D.2d 851,419 N.Y.S.2d 175 (2nd Dept. 1979).
In that case, the plaintiff’s magnanimous discontinuance would result in
a reduction of the plaintiff’s damages, and in under compensation. Such
a reduction, which in theory could amount to a significant percentage of
plaintiff’s economic and non-economic loss, could occur even though the
plaintiff did not receive any consideration for the discontinuance, and
it could occur even if none of the facts or claims establishing the
culpability of the released defendant had been asserted, or known, when
plaintiff discontinued.

This feature of G.O.L. §15-108 may be a trap to those unfamiliar with
the statute, but it is well known to experienced plaintiff’s counsel.
Their reaction is precisely what one would expect. Knowing that a volun-
tary discontinuance can cost the plaintiff thousands or even millions of
dollars if new facts and new theories point the finger of blame at the
released defendant, and also knowing that there is no risk of any such
penalty if the ostensibly blameless defendant instead moves for and
receives summary judgment from the court, the plaintiff’s attorney will
typically answer a request for a discontinuance by saying, to extricate
yourself, you must make a summary judgment motion.

In this situation in which an ostensibly blameless defendant seeks to
drop out of the lawsuit, the other defendants might not mind if that
occurs. . . provided that they, the other defendants, can commence their
own third-party claims if and when it seems wise to do so, for they too
are concerned that a defendant who now appears blameless may later
appear to bear some responsibility. The problem, from their perspective,
is that they will not be allowed that choice. If plaintiff discontinues
against the ostensibly blameless defendant, then, per the current stat-
ute, that defendant cannot be sued for contribution. And if the osten-
sibly blameless defendant moves for and receives summary judgment, then
that defendant is forever free from liability. . . no matter what turns
up later on. For these reasons, the remaining defendants are virtually
forced to oppose the summary judgment motion, even if they would have
preferred to provisionally allow the movant to leave, so long as there
is any arguable basis for opposition.

Thus, what might have been a consensual discontinuance instead becomes a
contested motion, and, perhaps, after the motion is resolved, a
contested appeal.

The proposed amendment would eliminate three kinds of releases from the
statute’s scope, but only two of the exclusions constitute changes as
compared to current law.

First and foremost, discontinuances given without monetary consideration
would be removed from the statute’s scope, meaning that a plaintiff
could discontinue without risk of being penalized for doing so. This
would help the ostensibly blameless defendants to get out of the case as
quickly and as inexpensively as possible. It should be noted that, in
an instance in which the plaintiff initially sued and thereafter
released an individual or corporate entity without monetary consider-
ation for the release, the remaining defendants’ rights against that
released individual would be exactly the same as if the individual had
never been sued in the first place. More specifically, the remaining
defendants would have the same rights that they would have initially had
to implead the individual and thereby seek contribution or indemnity or
to instead seek a CPLR Article 16 set-off by reason of the individual’s
culpability. Of course, under the terms of Article 16, the Article 16
set-off would apply only to the plaintiff’s non-economic loss, and then
only if the party seeking the set-off was assigned 50% or less of the
culpability.

Second, by limiting the statute to those releases that "completely or
substantially" terminate the dispute against the released defendant, the
new subdivision would effectively exclude "high- low" agreements in
which the parties agree to confine the damages to an agreed range. The
subdivision would also effectively exclude agreements in which the
parties merely narrow the issues (perhaps, by conceding liability, or
jurisdiction) without fully resolving the action.

The exclusion of high-low agreements constitutes a change, although the
current rule is not well-settled. The exclusion of other issue narrowing
agreements may or may not constitute a change; the current rule is not
clear enough to say. In any event, the "completely or substantially
terminates" limitation is not the main point of the amendment, and is
not likely to have as pronounced an impact as the "greater than one
dollar" limitation. However, the Committee advocates the "completely or
substantially terminates" provision because there is no policy reason
why issue-narrowing agreements should be deterred or why such agreements
should engender windfall consequences for the other parties.

The exclusion of post-judgment settlements would be a codification of
current law. The Court of Appeals long ago ruled that the statute does
not apply to post-judgment settlements, and that rule has never been
seriously questioned since then. The proposal codifies that rule because
(1) the rule sensibly allows the plaintiff to accept a partial payment
from one defendant who may have no other assets except for his or her
personal possessions, and to do so without unintentionally releasing the
other defendants, and (2) adoption of a new, statutory exclusion that
did not expressly recognize the existent, common-law exclusion could
conceivably be construed as a rejection of it.

This measure, which would have no fiscal impact on the State, would take
effect 30 days after such time as it shall have become law, and it shall
apply to all releases or covenants not to sue effected on or after such
effective date. "